Analysis of options for Maximizing Local Government internally generated Revenue in Nigeria

Moses Atakpa, Stephen Ocheni, Basil C. Nwankwo

Abstract

This study examined the various options for maximizing internal revenue generation in the Nigerian local governments. It took critical and hard look on the various sources of internal revenue in the local governments, problems of exploiting the various sources for revenue generation, and the reason why most of the sources remain untapped or under-tapped by the local government in Nigeria. The study suggested feasible and pragmatic ways to maximize internal revenue generation in the local governments. It observed that prior to 1976 Local Government Reform; most local governments were able to maximize their internal revenue generation and discharged their primary responsibilities with little or no financial assistance from the higher tier governments. However, with the introduction of statutory allocations to the local governments following the 1976 Reform, most of the local governments abandoned the hitherto viable internal revenue sources in preference to the revenue from statutory allocation. This unwholesome attitude of most local governments, among others, was identified as the bane of internal revenue generation at this level of government. The paper concludes, by stating that unless the local governments look inwards to maximize their internal revenue sources it cannot be financially self-reliant. The implication of this is that it cannot enjoy reasonable degree of autonomy as a third tier of government if it continues to be heavily dependent on the financial assistance from both the federal and the state governments, to be able to function effectively. The reason is because as the saying goes, “he who pays the piper dictates the tune.”

Keywords: Local Government, Revenue, Reforms, and Administration

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